However, avid federal budget watcher and author of the analysis, Chris Richardson, also believes personal income tax cuts will be on the agenda next year, a welcome relief with wage growth at a record low.

In coming to that position, he argues the budget is in better shape - at least in the short term - the government is behind in the polls and the tax take will rise relatively fast in the next few years, mostly from middle-income earners.

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He expects Treasurer Scott Morrison will reveal an improved budget bottom line when he releases the mid-year review in December.

He expects the mid-year economic and fiscal outlook will show a budget deficit of $25.8 billion for 2017/18, $3.6 billion better than predicted in the May budget.

The windfall is the result of higher company profits due to an improved China outlook lifting demand for Australia's key commodities, such as iron ore.

That will provide a lift to company taxes and a rise to employment-boosting personal taxes.

While Mr Richardson also anticipates a $1.25 billion budget improvement for 2018/19, beyond that, upbeat company profits are unlikely to continue as the China economy slows and the Australian property market cools.

"Lower taxes on individuals adds to the mix in 2020/21 as the outlook for wages deviates further from Treasury's," Mr Richardson said.

Wages growth presently sits at its lowest level in at least 20 years at 1.9 per cent, while in the budget it is expected to lift to 3.75 per cent by 2020/21.

"To get to a surplus, official forecasts assume a healthier economy than we do, and they assume that healthy economy will then generate additional tax at record rates," he said.

"We therefore think that the official forecast to a return to surplus is built on shifting sands."